Are You A Saver?

MSN Money addresses the dark side of being a compulsive saver (such as not enjoying spending or giving) while also extolling the virtues of being able to control your spending (like becoming wealthier.) But we found their definition of being a “saver” to be the most interesting thoughts in the piece. They think you’re only a saver if you:

1.Save more than 20% of your earned income each year.
2. Spend and give away less than 3% of your total net worth each year.
3. Increase your net worth by more than 5% from year to year.

These factors probably eliminate a wide portion of the population, but do they eliminate you? Would you be considered a “saver” based on these criteria?

Secret millionaires: Addicted to saving [MSN Money]
FREE MONEY FINANCE (Photo: kiteflyer532)

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  1. madanthony says:

    I guess it depends on your definition of “save”.

    I certainly don’t put 20% of my income in the bank. However, a sizable portion of my net pay – close to 50% – goes to my mortgage, which I consider a sort of forced savings plan – it helps me get closer to a point where I don’t have a monthly payment for where I live.

    Besides, while I do try to save money, I then use it to pay off debts – I paid off my 5-year car loan in 18 months, and am currently saving with the goal of getting enough of my mortgage paid off to drop PMI. It doesn’t make sense to save money in a bank account when I’ve got higher-interest debt to pay off.

    • springboks says:

      @madanthony: I agree “save” is a relative term, and varies from person to person. Your consideration of a mortgage payment as a “forced savings plan” made me chuckle. To me mortgage/food/transport aren’t a savings or a long term investment. They’re an overheard and something we pay for to stay alive and live in comfort.

  2. Etoiles says:

    Spend and give away less than 3% of your total net worth each year.

    Presumably they mean that in discretionary spending? Because if 20 – 35% of your funds go to housing…

  3. Traveshamockery says:

    It’s pretty unfair for them to define “Saver” in such a hard and fast way. I don’t think being a a saver is anything more than a mindset.

    My wife is a spender, I’m a saver. I explain it by saying “She likes to watch the clothes closet fill up. I like to watch the bank account fill up.”

    I’m spending less than I earn, paying off my debts fast, and putting money away each month. However, I still give more than 10% of my net to my church, and make other charitable donations as well. According to MSN Money, I’m not a saver. Silly.

    • Erwos says:

      @InfiniTrent: Your actions determine who you are, not the labels that you’d prefer to give yourself. If your wife is spending so much money that you can only save 3% of the family budget, well, you’re not a saver household.

      If you were keeping your accounts separate for whatever reason, maybe you’d have a point, but it’s semantics once the money goes into the family pot.

      • Traveshamockery says:

        @Erwos: I wasn’t clear enough. Her natural state is of a spender. Mine is of a saver. We have a mutually-agreed-upon budget that we stick to, together. That way, we’re both happy.

        • Haltingpoint says:

          @InfiniTrent: Right but it appears his point was that while you might have a disposition to save, you do not fit the standard definition of a “saver” unless you meet those numbers, despite how you might classify yourselves.

  4. Erwos says:

    Interesting. Doing the math in my head, we’re probably savers by that definition. We recently bought a house and needed to get a few things done, so that’s cut back into our non-retirement savings, but we’re finally getting done with repairs and such, so I’m hoping we can start replenishing it back to the six-month expenses mark where we like to be.

    I don’t spend a ton of time worrying about the market, although it’s never fun to see your 401k and/or IRA drop.

  5. Quilt says:

    Who the hell is capable of spending only 3% of their yearly income? Don’t they EAT!?

  6. shoelace414 says:

    I’ll say I’m a saver.

    Those are my jars of coins. :)

  7. gafpromise says:

    I disagreed with the whole tone of the article. Is it really a good idea to publish an article in the current climate, describing saving as pathological? These are people who have enough to live comfortably but not extravagantly. That’s something I aspire to. And right in the first couple of paragraphs, it has this sentence: “These are the kind of people who tend to buy used cars or purchase products only when they go on sale.” Yeah, I do that all the time! I certainly don’t consider myself compulsive or pathological- just moneywise.

    • Erwos says:

      @gafpromise: Excessive saving can be pathological. My wife’s grandmother was a Depression baby, so to speak, and there is no doubt in my mind that her excessive savings (which quite exceeded 20%!) was causing her social and mental issues.

    • floraposte says:

      @gafpromise: I think there’s a reasonable underlying concept, but that the term and the article is muddying it. The problem isn’t that people with money choose not to buy flashy cars; the problem is when whatever you save doesn’t alleviate your fear that you don’t have enough, and that you can’t actually use the money for reasonable enjoyment.

      IOW, that you’re my dad.

  8. howie_in_az says:

    I max out my 401k every year at 15% and then put 10% into a savings account/CD ladder, but at this point “donating” money to my 401k is the equivalent of shoveling it into a fire. So no, I’m not a saver :(

    • Traveshamockery says:

      @howie_in_az:

      …at this point “donating” money to my 401k is the equivalent of shoveling it into a fire.

      I really wish people would quit making comments like this. Look up Dollar Cost Averaging, read, and understand.

      SELLING your 401k right now is the equivalent of shoveling money into a fire. Holding will almost certainly result in long term gains.

    • mac-phisto says:

      i would consider these more the definition of a miser than a saver. hording sums of money – what’s the point? i understand the concept of living within your means & saving for your future, but saving money (to me) is quite pointless, in & of itself. i mean, i enjoy saving, but money is simply a tool; a means to an end. what is the goal of amassing a huge fortune? if just for the sake of having it…well, that’s something i’ll never understand.

      • princesswildflower says:

        @mac-phisto: Here, here – a philosophy that I can agree with.

        So saying, it’s great to save and to put money away if you see yourself enjoying it at some point. The same way you might have a nice meal and know that you’ve enjoyed it.

        The two are not mutually exclusive.

  9. rick_in_texas says:

    I’m afraid I’m a saver.
    You’re probably a Saver if you:

    Save more than 20% of your earned income each year.
    Check (20% goes into 401k which is the max allowed)

    Spend and give away less than 3% of your total net worth each year.
    Check (kids are almost grown and have their own jobs)

    Increase your net worth by more than 5% from year to year.
    Check (true every year except this one…first in 25 years)

    But then again I have to save in order to afford retirement when it gets here in 15 years!

    • Haltingpoint says:

      @rick_in_texas: If you don’t mind my asking, how much is your net worth approximately that you are able to spend less than 3%? I’m a couple years out of school and my net worth is around $30k which would mean I could spend a whopping $900 per year!

  10. pecan 3.14159265 says:

    I don’t understand how the article equates saving to being a problem. People who only buy cars when they’re on sale? Cars are a massive investment, you’d be INSANE not to negotiate or wait until car dealers offer incentives to move their stock.

    And if anyone takes that Money personality quiz linked in the article – one of the questions is something like “are you dependent on others, credit cards and debt” – I love how an article supposedly giving financial advice and information suggests that anyone using credit cards is dependent on other people and is in debt.

    • Decaye says:

      @IHaveAFreezeRay: Shrug, I have a friend who’s super cheap, and we used to either have to ditch him, or just not do anything a lot of the time. Not that fun. College kids are supposed to do things, so in that case, saving has negative effects.

  11. Hooray4Zoidberg says:

    I that reminds me, I need to move some cash into my savings account from last months paycheck. Thanks consumerist!

  12. Ron Draper says:

    Uh oh. I put money into savings…but do I put TOO much into savings? I wish that someone would write an article explaining to me the right way to do things, because if there’s one thing we need right now, it’s to chastise the prudent and frugal.

  13. pandroid says:

    I save about 30% of my take home a month, but since I just started doing this in the last year, I’m not anywhere close to #2… especially since my net worth is still negative. I’m hoping it will be positive by sometime next year. I live like a saver, though.

  14. Dacker says:

    I’m a saver — but the problem is that my wife spends more than I can save!

    Sadly, this is no joke…. :-(

    • princesswildflower says:

      @Dacker: Speak to her. Get her to understand the joys of saving. Trust. I’ve been on both sides of the fence and am immensely happier on the savings side.

      Not that I don’t still love a good spending spree, mind…

  15. battra92 says:

    By that definition, no I am not a saver.

    However if a saver is one who spends less than he earns, has a 401K, funding an emergency fund and a savings for a house then I am indeed a saver.

  16. pecan 3.14159265 says:

    In my eyes, there are two kinds of savers:

    Those who rightfully put away X amount of money into savings for the betterment of the long haul (retirement, emergency money, etc.) and who still spend money for pleasure (going to the movies, hobbies, etc.) but do not go overboard (overboard meaning they eventually go into debt or dip into their savings). They live a comfortable lifestyle (comfort defined by having amenities, being satisfied with the things they do have) and are well-adjusted individuals who understand that though this may mean they are forgoing certain luxuries in the present, they are saving for the betterment of their future, and this makes the gain in the long run worth their (relatively) minimalistic lifestyle now.

    Then there are the savers who I define as borderline pathological. These people have the wiggle room to eat healthily, to spend money here and there on hobbies, movies, entertainment. But they choose to sock away every dime and save money at the expense of their health or social wellbeing. I’m not talking about eating Ramen once in a while, these kinds of savers don’t grasp the concept of spending more on a winter coat (versus buying one from Wal-Mart) because a better quality coat (which will cost more) will keep you warm, protect you from cold and precipitation, and this will decrease your chances of getting sick. To them, all products are on an equal level and they see people who spend more on X item to reap better rewards from it as frivolous. To them, everything is on an even plane.

    These are the people who, when they gather with friends, will eat ahead of time, and won’t go in with everyone else for pizza (and subsequently, won’t eat any).
    These kinds of savers will sacrifice their social wellbeing to save money. What is $5 to you in the context of six people ordering pizzas? These kinds of savers won’t even give up $5.

    • Sarah of Get Cooking says:

      @IHaveAFreezeRay: I understand some of your points, but I have to disagree with the last part. Only for the reason that for most people, going out with friends almost NEVER costs only $5. Resisting the social temptation to spend should not be considered pathological – studies show that peoples’ spending habits often mirror those in their social circle – which is only fine if you all make/have similar amounts, and have similar goals. If your goal is to save money for the downpayment of a house or have children, and your friends never plan to have a house or children and go out for “pizza” every week – well I don’t think you’re a miser to skip out on it every once in awhile.

      Gosh, when did I become a party pooper?

      • Sarah of Get Cooking says:

        @sc2373: Forgot this: [www.google.com]

      • Sarah of Get Cooking says:

        @sc2373: Ignore the link to google reader…

        Here’s the money and social link discussion I meant to post: [www.iwillteachyoutoberich.com]

      • banmojo says:

        @sc2373: If their spending “mirrors those in their circle” then they shouldn’t be in a circle that goes out for pizza if they’re not going to pitch in and enjoy the meal together. I’ve had 3-4 acquaintances who, when out at a restaurant, would bitch and complain about every little thing, and especially about the cost. They never became my friends, if you know what I mean.

        • Anonymous says:

          @banmojo:

          There’s bitching and complaining and then there’s enjoying your friends’ company without spending money you either don’t have to spend or don’t want to spend because you have different priorities. Savers are under no obligation to “get different friends” – if their friends aren’t bothered and don’t ditch them then there’s no problem there.

          Besides, it’s never $5 for a pizza. It’s $5 for a pizza and $2 (or $4 for a beer) for a coke and $4 for breadsticks and … eating out is expensive! And unhealthy. That pizza outing could pay for three meals or more made from scratch, assuming a moderately well-stocked pantry of staples.

        • pecan 3.14159265 says:

          @banmojo: And sadly, that’s the experience I’ve had with these individuals. It’s like having a Christmas party with white elephant, but you’re the only one who shows up and doesn’t have a gift with you for exchange, even though the set spending limit was $5. It kind of excludes you from the fun, doesn’t it? And it doesn’t encourage others to invite you for more because if you’re not participating in the fun, you’re just a bystander. And these types of savers don’t grasp that their social wellbeing has to do with doing little things with friends as a group, like pitching in for pizza instead of eating at home.

          • mac-phisto says:

            @IHaveAFreezeRay: completely agree with you. the $5 example is a bit unrealistic, but it’s not the amount that matters. it’s the idea that money is simply a tool.

            saving is important to me, but enjoying the time i don’t spend in the trenches is just as important as increasing my net worth. if that means i don’t fit money’s definition of a ‘saver’, well that’s just dumb.

            try this on for size: i made $X this year. i spent $Y this year. if X-Y>$0 i’m a saver. if X-Y<$0, i’m not. & if along the way, $Y eqautes to some great memories i wouldn’t have had otherwise, well that beats squirreling away every red cent 100% of the time.

  17. Beerad says:

    Um, I live in NYC, where the average person pays over 25% of their income in rent or mortgage (might be closer to 33% IIRC). While it would be nice to be able to save to the point where that is less than 3% of your net worth, it’s frankly impossible, especially if you’re trying to, you know, eat and stuff.

  18. kwsventures says:

    About a year ago, looked over my financial history and realized I saved 23% of my gross income for the last 24 years. Add in reinvested interest, dividends and capital gains and the savings goes even higher. It is possible. But it means you probably can’t buy every new gizmo and tech gadget that comes out each year when they are priced the highest. You can’t lease a car. You can’t buy a new car every 3 years. I have only owned 2 cars in those 24 years. You have to brown bag lunch. You can’t buy a $4.00 Starbucks coffee milk shake everyday. You can have revolving credit card debt. Cut most of the needless fat from your budget.

  19. forgottenpassword says:

    Yes, I am a saver.

    I put about 30% of my income into my savings.

    Have absolutely NO debt.

    I am a bit of an obsessive saver. The only thing I really splurge on is fast food & that’s because its more of a convenience.

    I once worked 7 months straight (7 days a week) at my job because it was an excellent opportunity to put a lot into my savings.

  20. kwsventures says:

    I have been working a 2nd job, around 10 hours per week in the evening for 15 years. Gosh, I missed all those “great” mindless TV shows. Never seen American Idol. Never seen Dancing with the Stars. Never seen Oprah show. I hear about them from co-workers. Have no interest in watching them. I have saved over $245,000.00 working that 2nd job. Those TV shows wouldn’t pay me a dime to watch them.

  21. chauncy that billups says:

    2. Spend and give away less than 3% of your total net worth each year.

    This eliminates most churchgoers and charity givers. Pretty dumb, if you ask me.

  22. Anonymous says:

    I find #2 out of place. This says whether or not you’ve been a saver long enough to have a net worth that is roughly 33 times your yearly expenses, not whether or not you’re a saver now. This would take quite a while…. sorry that I’m 25 and have been working only 2 years full time — that is somehow suposed to preclude me from being a saver? Also, I can never tell if people are talking about gross income or net income when it comes to percentages. There is a huge difference. For the record I do all my budgeting based on the gross… it is very eye-opening.

  23. Cat_In_A_Hat says:

    According to the “what’s your money type quiz” I am a saver and stable with my money management. I have always been into saving since I was a child when my father tried to instill in me the meaning of what it meant to need something rather than simply wanting something. I opened my first savings account when I was 11 and watched my money grow to nearly $15,000 by the time I was 18 from having a part time job in my teens and saving the bulk of my income. As the youngest in my family, I’ve learned from the mistakes my family members have made with racking up unnessary credit card debt and spending frivilously on certain items. I was able to finance my own way through college through scholarships which the excess was paid directly to me so having a lot of extra money around made me appreciate it more. While I do splurge on things like traveling, I prefer to live within my means and save towards whatever my next goal is. Although I wish my habits would rub off on my close family memebers who are up to their neck in debt, some seem to be content with dodging collection calls and not opening bills. Doesn’t seem like something I’d be too interested in.

  24. Cat_In_A_Hat says:

    And I am a huge believer in not spending coins or change. I admit to proudly rolling pennies, nickels, dimes, and quarter and taking them to the bank. After about 3 months of collecting, 1/2 of what I have saved is put into savings and the other half I use to treat myself to something small. You can really be suprised at how easy it is to lose track of where your money is going when you spend excess change.

  25. ShariC says:

    By these definitions, I believe I may fit these criteria but I’m not sure about the last. I don’t own a home or car (I rent and live in a city with public transport)so I can only increase my “net worth” through piling up more cash in a savings account and I don’t know if that is what they mean as my money is losing value every year due to inflation. However, I don’t think I deprive myself or am miserly. I buy what I want or need. I just don’t want or need much because I’m 44 and I’ve totally bored with being materialistic and shopping for fun.

    There’s a vague hint of there being something wrong with not enjoying spending or consumerism. Stuff just isn’t where I get my joy in life. I don’t make a strong effort to save, the money just sort of saves itself because I don’t have any motivation to spend.

  26. RosePapagano says:

    I have 4 x my normal paycheck in the bank. i try and make it increase every month.